Gains and losses of the US economy after one year of announcing reciprocal taxes

On April 2, 2025, US President Donald Trump announced a 10-50% reciprocal tax on all trading partners. Tariff policy fluctuated widely in the following months, as he reached agreements.

On February 20, the Supreme Court rejected the tariffs cited from the International Emergency Economic Powers Act of 1977 (IEEPA). Just a few hours later, President Trump announced a new additional import tax of 10% under Article 122 of the Trade Act of 1974, for a period of 150 days.

Meanwhile, duties imposed under Article 232, which mainly affect imports of steel, semiconductors, aluminum and other products, remain the same.

According to the White House, the US economy has become “more resilient, more competitive and more secure”. “The results since ‘Liberation Day’ have been staggering: more than 20 new trade deals, trillions of dollars in manufacturing investments, falling drug prices and a reduced goods trade deficit,” said Spokesperson Kush Desai.

Data from the Trump administration shows that the US trade deficit in goods has decreased by 24% in the period April 2025 – February 2026 compared to the same period. The deficit with China and the EU decreased by 32% and nearly 40%, respectively. The US’s bilateral goods trade balance has improved with more than 63% of partners.

Along with that, the industrial production index is at its highest level since 2019. The White House cited research by the Bank of England, saying the average export price to the US has decreased, while export prices to other countries have not decreased, a sign that foreign manufacturers are sharing tariff costs by lowering export prices.

But the economic picture has many other colors. The group of experts David Hebert of the American Institute for Economic Research and Donald Boudreaux, Professor of Economics at George Mason University, pointed out the comparison of economic performance in 2025 with 2024 – the time when Mr. Trump said that the US economy was “dead”.

Accordingly, real GDP increases by 2.1% in 2025, compared to 2.8% in 2024. Employment growth reaches 0.5%, lower than 1.2% in 2024. Despite the government’s announcement to attract many investment commitments to receive tax reductions, FDI last year increased by 1.2%, compared to 2.7% in 2024. Domestic investment slowed down, only increasing by 2% compared to 2024. 3% the previous year.

Import turnover in 2025 is actually 4% higher than 2024, reaching 3,400 billion USD, especially because companies promote front-loading. The goods deficit increased by about 2%, to 1,240 billion USD.

“If the economy is ‘dead’ in 2024, there is no evidence that Mr. Trump’s tariffs have revived it,” the two economists said.

Tariffs also mean higher costs for consumers. In August 2025, the US Federal Reserve pointed out that people had to bear 94% of the costs from tariffs. By the end of the year, the pressure improved, but was still up to 86%.

Retailers like Walmart, Best Buy and Macy’s have increased prices on some items, while also looking for ways to offset costs. Food prices increased by 2.9% over the same period last year. The typical American household faces an increase in food costs of about $1,500 per year, according to the Yale Budget Lab.

According to economist Douglas Irwin at Dartmouth College, more than half of US imports are inputs for production. Tariffs shift resources to expensive domestic products instead of cheaper imports. The combination of rising production costs and higher consumer prices will slow growth.

By March 2026, 31% of voters supported Mr. Trump’s economic policies, according to a poll by CNNthe lowest of his career, down from 44% a year earlier. 65% of respondents said the president’s policies have worsened the economic situation, higher than any number recorded under Mr. Biden.

In the stock market, the Dow Jones is up 13%, the S&P 500 is up 16% and the Nasdaq is up 20% in 2025, underperforming most other developed markets, despite outperforming in the past decade.

For example, DAX (Germany) increased by 23%, Nikkei 225 (Japan) increased by 26%, S&P/TSX (Canada) increased by 29% and Kospi (South Korea) increased by 76%. Because financial markets are predictive, these numbers show that the global economy can still find a way to grow despite limited access to the US market due to Mr. Trump’s tariffs.

Russ Mould, chief investment officer at AJ Bell, said investors are continuing to reassess their exposure to US assets. Caused by a series of factors, including: Mr. Trump’s tariffs and trade tactics, the independence of the US Federal Reserve being challenged, military activities in Latin America and the Middle East, combined with high market valuations and a skyrocketing federal deficit.

“Investors appear to be more thoughtful about capital allocation in a post-‘Emancipation Day’ world and in light of the political, economic and military weight of the president’s social media posts,” Mould said.

He admitted that the US stock market has recovered strongly from the bottom of ‘Liberation Day but is no longer a top priority like it was for most of the time since the 2008-2009 Global Financial Crisis. “In other words, this is no longer an ‘America first, the rest doesn’t matter’ story anymore,” he said.

Expert Dorian Carrell, Head of Multi-Asset Income at Schroders, said that uncertainty around the Iran conflict, pressure in the private credit sector and high capital spending on AI are recent factors pushing international investors to reconsider strategy.

“One year after ‘Liberation Day’, the investment environment that was once synchronized and policy-led is gradually giving way to a landscape more driven by domestic priorities, geopolitical tensions and lack of consistency and unpredictability,” he commented.

During this time, Wall Street Journal believes that, to compensate for the loss of the US market, countries lower barriers and increase trade with each other. “The world is not de-globalizing but re-globalizing around partners that comply with the rules, instead of those that use tariffs as an imposing tool,” said economist David Hebert of the American Institute for Economic Research.

White House spokesman Kush Desai is optimistic. “This is just the beginning of the President’s global trade transformation: as these trade and investment agreements continue to take effect and more are signed, the American people can be confident the best is still ahead,” he said.